Four key tactics to manage your small business budget in challenging times

A well-organized small business budget can carry you through rough times. While you may think of your budget as a tool to manage day-to-day spending, it’s more than that: It’s a tool to help you save for the lean times, plan your spending, and learn to spend strategically.

Creating and managing a budget involves continually gathering information about your sources of revenue, your fixed expenses (such as monthly subscriptions and office rental), your variable expenses (such as office supplies), and expected large spends (such as new computers). Seeing your past spending can help you forecast future spending and adapt more easily to economic shifts, like a seasonal drop in demand. Understanding your budget can also help you evaluate your options when something unexpected happens, like having to shutter your retail space for months during a global pandemic.

Here are four key strategies that will help you manage your budget to weather whatever lies ahead.

Build good habits

While paperwork and bookkeeping may not be your passion, this behind-the-scenes work is what keeps the exciting parts of your work going. Good budgeting helps you take into account your organization’s off-season and cyclical changes in revenue, so you can more clearly predict the peaks and valleys throughout the year. It may be tempting to leave the budgeting till the end of the month, but keeping up with your budget regularly by reviewing it at least twice a month lets you spot problem areas before they spin out of control, especially in lean months.

On the upside, a solid budget lets you know when you have extra cash to pursue a new opportunity. Perhaps your preferred vendor is offering a limited-time deal on a crucial part if you buy a large quantity. Your budget will help you decide whether you can take advantage of the deal, or if the additional outlay will make it tough to meet payroll this month.

Recommendation: Most professional budgeting programs can generate a variety of reports — including balance sheets, profit-and-loss sheets, and many more — so if you’re new to business money management, it’s helpful to run some of these reports daily to keep your spending top of mind. A quick daily look might catch a discrepancy in a fixed expense, alert you to an unexpected dip in profit, or help you spot a source of untapped cash.

Use a business credit card

If you use a business credit card, your expense tracking is even easier. For instance, instead of entering receipts manually into your budgeting program, you can download your expenses from the card issuer. Plus, many business credit cards give you the opportunity to earn points, get cashback, or offer other perks, just like your personal cards. Finding the right business credit card can save you time and earn you rewards, while giving you extra time to pay for purchases.

Business credit cards fill an important niche for small organizations. In a 2018 economic poll by the National Small Business Administration, 35 percent of respondents reported using credit cards to meet their capital needs, as opposed to only 13 percent who rely on a large bank loan.¹

Recommendation: The Amazon Business Prime American Express Card offers 5% Back or 90 Day Payment Terms on US purchases at Amazon Business, AWS, Amazon.com, and Whole Foods Market with an eligible Prime membership. You’re able to decide on the benefit option you want purchase by purchase. Terms and cap apply. You’ll also receive rewards on other purchases. The Card can help you get the purchasing power you need for supplies, equipment, and other expenses.

Use credit to manage your cash flow

Smart use of credit can ease some of the pressure on your organization’s bank account when times get tough. Focus on success but be mindful of threats to your business and your cash flow: competitors, natural disasters, political shifts, legal rulings, strikes, accidents, and so on. Having the option to use credit during these times can mean the difference between struggling to stay afloat and maintaining stability for employees and customers.

When asked in an economic poll by the National Small Business Administration about the effects of lack of available capital, 19 percent of respondents said they were forced to reduce their number of employees, and 10 percent admitted they were unable to increase inventory to meet demand.¹

Fortunately, many vendors are willing to offer you credit terms on the supplies, parts, and services you need to run your organization. Common terms are “net 30” (the payment is due within 30 days). The ability to “purchase now, pay later” means you can keep business going while you build your customer base and wait for payments to come in.

Recommendation: Determine which vendors you use frequently, and ask about payment terms and credit options. Eligible organizations can take advantage of Amazon Business's Pay by Invoice option, which allows buyers within your organization to purchase on Amazon with 30- to 60-day payment terms. With Pay by Invoice, you can consolidate invoices and easily track spending across your organization with built-in reports. This payment method helps free up cash flow when you need it most and can be used as a supplement to existing payments like credit cards. These flexible options offer the familiar shopping experience of Amazon, coupled with an easy-to-use, online store for management and payment.

Eligible organizations can take advantage of Amazon Business's Pay by Invoice option, which allows multiple buyers in your organization to make purchases on Amazon with 30- to 60-day payment terms. These flexible options offer the familiar shopping experience of Amazon, coupled with an easy-to-use, online store for management and payment. 

Develop processes and principles

Creating a budget for a business is a team-wide endeavor. Even if you already have a working budget, there’s always room for improvement. Work on developing or honing your organization’s budget, and then create processes that you can communicate to other team members, so that everyone is aware of budget goals and limitations. Plus, involving co-workers in planning and managing the budget can give you insights you hadn’t considered.

Recommendation: Start with a brainstorming and information-gathering meeting to hear your co-workers’ ideas on what budgeting tools and processes might be right for your organization. From there, choose a smaller, focused team to help research the best options and assist you in developing the process for creating or updating the budget, seeking credit, managing bookkeeping day-to-day, and handling end-of-month, end-of-quarter, and end-of-year tasks. Announce and launch your plan, making sure that each team member knows their capabilities and responsibilities when it comes to purchasing, submitting invoices, and making payments. Plan to evaluate your new tools and processes throughout the first year and adapt as needed.

Though some of these budgeting strategies may seem daunting, the sooner you start on your business budget plan, the sooner these tasks will start paying off. You had the courage and guts to start a business – you can tackle this too. 

^{1.       National Small Business Association, 2018 Mid-Year Economic Report.}